Ask OASIS Business failure rates
In order to study business failure rates, you have to first define what a business "failure" is. We use quotes around failure because there's no clear-cut definition. Unfortunately, there is no easy answer to the business failure rate question, nor is there one place where the data is available as easy-to-read statistics. You may need to interpret and calculate the raw data, turning it into the statistical information necessary for your research. You need to be ready to do some work if you find that no one else has already done this ahead of you.
These are things to consider.
- When does a business fail, and when does it simply close?
- If a start-up closes within the first few years because it's insufficiently funded, then it's easier to argue it has failed.
- Is it a failure if it ran for 5 years? 10 years?
- Is it also a failure if it made a profit but not as much as the owner hoped?
Where to begin the search
The Small Business Administration and Bureau of Labor Statistics keep statistics on business exits. This is the number of businesses that close in any given year. Notice that they're not tracking business failures, because the term is subjective, as discussed in the section above. Business exits is probably the number that you should seek out, but you need to think carefully about what it will provide.
Business exits include any company that closes, such as:
- a new start up that ran out of money
- a company that has been operating for a few years but is closed because the owner wants to change direction
- a company that closes after 30 years of fabulous success with a wealthy owner retiring to Hawaii
You will need to plot the survival rates by industry for firms founded in a specific year. Listed below are helpful government websites that track business exits or other related statistics or information.
United States government websites
The U.S. Government collects and presents useful data for business and industry research. Explore these sites for data and statistics.
Note: This list features some of the most commonly used sites, but it is not exhaustive. For help in finding other useful sites for your research, contact the Library via the Ask a Librarian service.
- Bureau of Labor Statistics Business Employment DynamicsThe BED data series include gross job gains and gross job losses at the establishment level by industry subsector and for the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands, as well as gross job gains and gross job losses at the firm level by employer size class.
- Business Dynamics Statistics (U.S. Census Bureau)Longitudinal source data that allows tracking a business or industry over time.
- County/Zip Code Business Patterns (U.S. Census Bureau)Search by geographic locale for subnational economic data by industry.
- North American Industry Classification System (NAICS, from U.S. Census Bureau)Identify the NAICS code for the industry you are researching, and build it into your searches in Business databases to make your searching more precise.
- Small Business Administration (U.S.): Firm Size DataFirm size data on employers are available from the Statistics of U.S. Businesses (SUSB), Business Dynamics Statistics (BDS), and Business Employment Dynamics (BED) programs, and data on nonemployers is available from the Nonemployer Statistics (NE) program.
- Small Business Administration (U.S.): Office of Advocacy Quarterly BulletinAdvocacy's two-pager of charts and tables uses economic variables to show the status of small business.
- Small Business Administration (U.S.): Small Business FactsSmall Business Administration provides reports and graphics on general business births and exits.
Sample search terms for articles
You can sometimes find articles that will present figures on failure rates, but be cautious and take a close look at how the article is defining failure for that figure. Additionally, it may be useful to search for business survival rates for various time-spans (e.g. 5 years).
Here are some alternate terms:
business exits
business closures
business AND births OR deaths
business survival OR business longevity OR business mortality
- Tutorial: Boolean Searching (Using AND, OR, NOT)
(4 min 45 sec) Closed captioning included in tutorial.
Business & Management databases
- ABI/INFORM Collection
This comprehensive business and management database contains peer-reviewed journals, trade publications, dissertations, conference proceedings, and working papers. Its country and industry reports support international and industry-specific business research.
- Business Source Complete
A reliable source for practical and scholarly business research, this database includes peer-reviewed journals, company profiles, financial reports, market research, and SWOT analyses.
- Sage Data
This database provides access to an extensive repository of standardized and structured statistical data from over 12.6 billion datasets. Users can search for, compare, visualize, and analyze data presented in a variety formats such charts, maps, graphs, and tables.
- Emerald Insight
Provides access to high-quality, peer-reviewed journal articles covering a variety of topics, including accounting, education, management, marketing, and public policy.
- Regional Business News
Search regional business publications from the United States and Canadian provinces, including newspapers, radio and television news transcripts, trade publications, magazines, and newswires.
- SAGE Journals
This multidisciplinary database contains the peer-reviewed journals published by Sage with extensive coverage of health, technology, and the social sciences.
- ScienceDirect
A database of peer-reviewed journals and books from the academic press Elsevier that focuses on scientific, technical and health literature but also includes social science coverage as well.